Two Birds, One Stone? Local Pollution Regulation and Greenhouse Gas Emissions

In most countries, environmental regulation focuses on local pollution, which causes damages near the emission source, while regulation on global pollutants such as greenhouse gases (GHG) has been slow. Theoretically, local and global pollutants can either be substitutes or complements in production, implying that local pollution regulation may either intensify or reduce global warming concerns. We exploit new data on US GHG emissions and variation in local pollution regulation across US counties to estimate this relationship. We find no evidence that more stringent local pollution regulation changes GHG emissions. Therefore, local pollution regulation will not suffice to address global warming. JEL Codes: Q52, Q53, Q54, Q58, H23 ∗Brunel: American University, School of International Service, 4400 Massachusetts Avenue NW, Washington DC 20016-8071, [email protected]. Johnson: Georgia Institute of Technology, 221 Bobby Dodd Way, Atlanta, GA 30332, [email protected]. This research was presented at Auburn University, Georgia Institute of Technology, the 2016 Midwest Economics Association Annual Meetings, and the Georgetown Center for Economic Research 2015 Biannual Conference. We would like to thank all seminar and conference participants for helpful comments. We would also like to thank Arik Levinson, Jake Mortenson, Juan Moreno-Cruz, Alison Weingarden, Andrew Whitten, and Caitlin Brown for comments and feedback. All remaining errors and omissions are our own.